Sustainability Rating of SRI-Funds
For sustainability and transparency in the fund market
The assessment for Sustainability Rating is done by GOE according to up-to-date methodology. The ratings are based on a comprehensive and systematic assessment. In a growing SRI-market GOE Sustainability Rating of funds provides guidance and transparency. The results of the Sustainability Rating are reported in fact sheets and a database. It is optimal for supporting investment decisions, for selecting appropriate SRI-funds for trading, for constructing SRI- fund of funds and for benchmarking a fund within its peer group
GOE Report No. 1-2005 Sustainability Rating. Analysis and Rating of Investment Funds
In
this publication you find in depth and actual ratings of more than 40 SRI
Funds available in German speaking countries. The publication contributes
to the transparency in a fast growing business of green, socially responsible
or sustainable financial products. In addition to a ranking of the SRI Funds
you find extensive fact sheets presenting the strengths and weaknesses of
the funds. That information supports you in the evaluation and selection
of a SRI Fund of your choice. Furthermore the publication presents the method
of the GOE-Sustainability Rating of SRI Funds. The development of the method
was supported by the Swiss Agency for the Environment, Forests and Landscape
and the Swiss Federal Office for Spatial Development.
Sustainability Rating. Analysis and Rating of Investment Funds
Köllner, T. and Weber, O. (2005)
GOE – Gesellschaft für Organisation und Entscheidung m.b.H.
Language: English
60 pages (printed report or electronic pdf)
Price: CHF 39.00
Method for our Sustainability Rating
Transparency was very important for us from the very beginning. The principles and the criteria (about 80) were presented and intensively discussed in two workshops with representatives from the investment sector (Bank Sarasin, Dexia, Global Care, SAM, UBS, ZKB), fund traders (Fondvest), environmental agencies (see above), universities (ETH Zurich) and SRI research providers (IMUG, Inrate, OnValues). Weights of criteria are based on opinion of workshop participants. The methodology behind Sustainability Rating is acknowledged internationally.
The sustainability rating of funds is based on multi criteria decision making. We assess the fund management and sustainability of investment portfolios. The rating of funds is based on three aspects:
- Quality of SRI-research and management of investment processes
- Environmental and social management of companies in the portfolio
- Environmental assessment of the portfolio (energy use, CO2 emissions, toxic emissions, hazardous waste, raw materials and others)
Rating Criteria for Fund management & SRI-Research
The management of the fund and especially the SRI research are assessed with respect to following criteria:
- Quality of SRI research (24 criteria): e.g. size and relevant experience of research team; information sources; on-site research, continuous monitoring; involvement of stakeholder for defining criteria
- Integration of SRI research into the investment process (12 criteria): e.g. construction of portfolio; portfolio composition with respect to own sustainability assessment
- Transparency (12 criteria): e.g. general reporting, transparency of methods applied, transparency of portfolio structure
- Impact on companies and the (10 criteria): e.g. feedback-loop to companies established
- Accountability (7 criteria): e.g. independent control committee, existence of quality standards, continuous improvement of research processes, sustainable performance measurement including backtracking, procedure for detecting defaults established
Peer groups for comparison of fund results
| Sustainability leader fund | Large companies with best sustainability practice in class, also best sector approach possible (>5 Billion € market cap) |
|---|---|
| Eco-pioneer fund | Innovative small and mid cap companies focused on environmental technologies and services (small cap <1 Billion €; mid cap 1-5 Billion €) |
| Leader/pioneer fund | Mixture of sustainability leader and eco-pioneer companies or countries |
| Ethical fund | Characterized by lists of negative criteria for excluding companies/ countries, also religious motivated |
| Style mix (ethical, leader, pioneer) | Mixture of ethical investments with sustainability leader and/or pioneer approach (with strong emphasis on ethical issues) |
| Environmental topic fund | Water, Renewable energy, Sustainable forestry, Environmental technology for cleaner production |
| Eco-efficiency fund | Large companies with best environmental practice in class. |
GOE Report No. 2-2005 Sustainability Rating. Comparative Analysis of Fund Portfolios
The goal of this study is to compare the environmental impacts of SRI-funds
with those of
conventional investment funds. The basic motivation for this
study was the observation that the overlap of the portfolios of sustainability
(SRI) funds and conventional equity funds can be very large. In addition
the sector allocation of both types of funds is in general very similar,
because portfolio manager follow the chosen benchmark to minimize risk.
Both effects can result in no differentiation of both types of funds in
terms of their environmental impact (null hypothesis). The goal of the study
is to comparatively assess the environmental impact of portfolios of 26
investment funds. We selected 13 sustainability funds and 13 conventional
funds for the benchmark MSCI World. The study applies the IO-LCA in combination
with a simulation of company specific environmental performance for evaluating
the environmental impact per functional unit for each fund, which is the
risk adjusted financial performance. We then use statistical analysis to
test the null hypothesis.
Sustainability Rating. Comparative Analysis of Fund Portfolios
Köllner, T., Weber, O. and Moser, C. (2005)
GOE – Gesellschaft für Organisation und Entscheidung m.b.H.
Care Group – Management Gesellschaft
Language: English
30 pages (electronic pdf)
Price: CHF 39.00
Both reports together are available for CHF 68.00
To order the publications, please send an e-mail with a request to info@goe.ch